SINGAPORE: The dollar rose broadly on Wednesday as the euro dipped on jitters over the fate of a rescue plan for Franco-Belgian bank Dexia, while the Australian dollar fell on data showing China's factory activity slumped to a 32-month low.
The euro sagged after Belgian newspaper De Standaard, in a report that cited no sources, said that Belgium and France were holding fresh talks about a deal they reached to rescue Dexia.
The dollar touched a six-week high of 78.526 against a basket of currencies at one point, while the euro dipped 0.2 percent to $1.3472, having dipped to as low as $1.3452 at one point.
Earlier, the single currency's drop gained some added steam after triggering stop-loss offers near $1.3475 with more stops cited at $1.3450.
"With all the woes in EU, I cannot help to be bearish euro versus the dollar," said a trader for a Japanese bank in Singapore.
One near-term factor that could support the euro against the dollar is rating agency Fitch's review of the US sovereign rating, expected by the end of November, the trader said. "Otherwise can't think of any reason to be long euro," he added.
The euro has been trading on either side of $1.3500 for days now, underpinned by talks of repatriation flows from European banks and a reluctance by speculators to put on more negative positions in an already short market.
But persistent worries over the euro zone's debt crisis and signs of dollar funding strains have kept market sentiment brittle.
Risk appetite took a further hit after the HSBC flash manufacturing purchasing managers' index (PMI), the earliest indicator of China's industrial activity, slumped in November to 48, a low not seen since March 2009.
The Australian dollar extended its losses on the data and touched a six-week low of $0.9756 at one point, its lowest level in six weeks. After trimming some losses, the Aussie dollar was last down 0.5 percent at $0.9779.
The Australian dollar is sensitive to shifts in China's economic fundamentals since China is a major buyer of Australia's commodity exports.
Having been frustrated by the euro's resilience, the market recently took aim at commodity currencies as debt problems in the euro zone claimed new victims and European banks struggled to access funding markets.
Trading is expected to be thin over the course of Asian trade due to a holiday in Japan on Wednesday and in the lead up to the US Thanksgiving holiday on Thursday.
With Tokyo players away, moves in the dollar versus the yen were subdued, with the dollar holdings steady at 77.01 yen.
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